The True Cost of a Bad Hire

Bad Hires

Ever leave an interview with an uneasy feeling… that perhaps… maybe… you just hired the wrong person? 😬

We all make mistakes. In fact, making a bad hire is a very common mistake indeed.

According to a CareerBuilder survey, 74% of the 2,250+ full-time hiring managers surveyed admitted to hiring the wrong person for a position.

Unfortunately for them – and potentially for you – the cost of hiring the wrong person can be disastrous for a company.

As the former CEO of online clothing company Zappos, the late Tony Hsieh, once estimated, bad hires cost his company over $100 million! 🤯

Let’s take a closer look…

What is a Bad Hire?

Before we start discussing the negatives and costs associated with bad hires, it’s worth understanding what a bad hire actually looks like.

Every employee may have a bad couple of days. However, most recover, and show why you hired them in the first place. 

Conversely, a bad hire is somebody who is simply not a right fit for the company, no matter how long they are in the job.

For example, a bad hire may consistently:

  • Produce poor quality work
  • Have a negative attitude
  • Struggle to work well with others
  • Have attendance problems (i.e. calling in sick, arriving late)
  • Fail to show the skills you hired them for (potentially lying on their resume!)

Most frustratingly, they may have the skills and turn up on time, but they fail to show any genuine desire to do the job or to work for your company.

In other words, they are just there for the paycheck.

In fact, this is one reason why the aforementioned Tony Hsieh offered every new recruit a $2,000 bonus to leave his company after the first week of training! 

Here’s his thinking. If they took the cash and left, they were only in it for the money in the first place and ultimately proved to be a bad hire in the making. 

For him, it was a small price to pay for nipping that bad hire in the bud.

The Cost of Bad Hires Add Up

Wasting figures like $100 million may seem quite high for a smaller business, but this is very realistic for giant brands like Zappos.

Luckily, one or two bad hires probably won’t cost your small business hundreds of millions. Still, costs can easily accumulate when you hire the wrong person.

In fact, the average cost of one bad hire is nearly $15,000 according to the earlier-mentioned CareerBuilder survey. Elsewhere, the Society for Human Resources Management says that hiring the wrong person could cost up to five times a bad hire’s annual salary!

It’s easy to see how these costs build up, aside from the obvious money wasted on the bad hire’s salary.

For example, there’s the cost of the bad hire’s onboarding and training, which was just money squandered as they pack their desk and leave the company. 

Then comes the administrative costs of letting your bad hire go, not to mention their severance package.

Meanwhile, you have to front the costs of rehiring another candidate to replace the bad hire, including recruitment advertising fees, and – of course – the onboarding and training costs for this new hire.

This is when you pray that the new guy isn’t another bad hire!

Bad Hires Cost More Than Just Money

This all makes for bleak reading.

A bad hire can cost big bucks with absolutely nothing in return apart from a lesson learned.

Yet hiring the wrong person can impact your company in ways beyond your bank account. This all contributes to the ‘true cost’ of a bad hire.

For example, a bad hire can negatively affect the morale and productivity of the team, as well as the company culture.

You can almost feel the tension build as the bad hire becomes toxic. 

Your good employees may have to chip in and do extra work to make up for what the bad hire didn’t do, which puts you at risk of losing those good employees. (For the record, the average cost of losing a good hire is reported to be close to $30,000!).

Depending on what role your bad hire was brought in for, this episode may have also resulted in missed sales opportunities or even lost customers. This can all result in an even bigger dent to your bottom line.

How to Avoid Hiring the Wrong Person

It’s clear that hiring the wrong person is a costly error in more ways than one. Luckily, it is an error that can be avoided with a little planning.

How do you do it? By ensuring you are hiring an A player of course!

But this is easier said than done – unless you have a good hiring system in place.  

This largely relies on having a clear idea of exactly who you want, what qualities they will possess, and what experience they will have. 

Then you need to have access to a good pool of candidates, where your ideal hire will be floating around. Finally, you need to have a robust and comprehensive interviewing system (for the record, that’s at least three interviews!).

Remove the guesswork by reading our complete guide to hiring an executive assistant. The information here is relevant for whatever position you are hoping to fill – from your next assistant to your head of marketing.

In the meantime, if you want more guidance and a one-on-one look at how you can improve the hiring process in your company, just reach out and book a free strategy call at 

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